In dealing with referrals, which practice aligns with fiduciary duties and transparency?

• A. Avoid discussing any referral fees with clients.
• B. Refer clients only to colleagues who compensate you.
• C. Disclose referral fees to clients and ensure fiduciary duties of loyalty and honesty.
• D. Avoid documenting referral details.

Answer: (C)

Fiduciary duties hinge on loyalty and honesty to the client and on being transparent about any factors that could influence a recommendation. When a referral involves a fee, there’s a real risk that the practitioner’s judgment could be swayed by payment rather than the client’s best interests. The appropriate approach is to disclose any referral fees to the client, so they understand potential influence and can make an informed choice. Keeping a record of the referral details reinforces accountability and shows the process was open and considered. This combination—disclosure plus documentation—upholds the duty of loyalty and honesty while maintaining transparency. Hiding fees, only referring to those who pay you, or skipping records undermines trust and breaches fiduciary responsibilities.